Lease Doc Commercial Loans in Melbourne

Melbourne's tenanted asset profile is built for lease doc

The strongest lease doc segments in Melbourne are healthcare property (medical centres in the eastern and south-eastern corridors), childcare centres along the south-east and growth corridor arterial roads, NDIS specialist disability accommodation, and tenanted industrial in Dandenong South / Truganina with long-WALE leases to logistics or manufacturing operators. These assets attract the deepest lender competition because the lease covenant carries the deal.

ICR is the binding constraint in Melbourne

Melbourne lease doc lenders require minimum Interest Coverage Ratios of 1.40–1.50× on lease income at the assessment rate. With current commercial yields in Melbourne's strongest sub-markets sitting at 5.0–5.75% (childcare, prime industrial) and assessment rates around 7.5–8.0%, the achievable LVR at policy ICR is usually 55–62% rather than the 65% theoretical cap. We model ICR before recommending the structure.

Lease doc is materially weaker on Melbourne CBD office

Lease doc lenders look through to effective cash rent net of incentive amortisation. Melbourne CBD office leases commonly include 12–24 months rent-free, fit-out contributions, and tenant inducements that reduce effective rent by 20–35% from headline. A nominally 6% yield can underwrite at 4.5% effective, often failing ICR. CBD lease doc applications need careful structuring around the incentive treatment.

$5.6M childcare centre, Berwick

120-place centre on a 15-year lease to a national operator with 3.25% annual reviews. Net rent $385k. Funded at 64% LVR ($3.58M) on lease doc at 6.85% IO with annual rate review. ICR at 7.85% assessment rate: 1.51× — comfortably within policy. No borrower income evidence; structure relied entirely on the lease covenant.

$8.2M medical centre, Glen Waverley

Multi-tenanted medical building, 6 tenants on weighted-average 7.2-year lease. Acquired by family office on lease doc at 60% LVR ($4.92M), 7.05% IO. Loan structured around the lease covenant; no personal guarantees on the principal investor (limited guarantees from the family office trustee company only).

$3.4M industrial, Dandenong South

Single-tenant 2,100sqm distribution facility on a 10-year lease to a national 3PL operator, 4% fixed reviews. Acquired by self-managed investor on lease doc at 65% LVR ($2.21M), 6.95% IO. The borrower's full doc capacity was preserved for two other concurrent acquisitions — the lease doc structure was strategically used to keep additional borrowing capacity available.